Prabhudas Lilladher has given Buy recommendation for Wipro with a target price of Rs. 637 in its research report issued on Jul 07, 2021
Prabhudas Lilladher’s research report on Wipro
Wipro’s new CEO, Thierry Delaporte, (appointed on 6th July 2020) has radically changed company’s operating model by 1) simplifying organization structure and reducing P&Ls from 25 to 4, 2) overhauling senior management, 3) focusing on M&A to fast-track capability building as well as access different geos and 4) bringing in sales orientation with centralized large deal teams client centric structure. Thierry took some bold decisions and executed them with speed, so that entire organization gets aligned with the new strategy. We believe, Wipro’s turnaround effort is right on track given 1) rise in large and mega deals wins (US4 1.4 Bn, 16.6% QoQ in 4QFY21) 2) uptrend in revenue growth rate (strong organic guidance of 2-4% QoQ CC for 1QFY22E vs avg 0.5% QoQ in last 3 years) and 3) speedy closure of Capco acquisition to further accelerate 1Q22 revenues. The company reported 19.4% EBIT margin, strong ~300 bps YoY increase in FY21 underscoring new CEO’s focus on profitable growth.
We assign BUY rating (earlier UNDER REVIEW) and value Wipro on 25X FY-23 EPS of Rs.25.5 to arrive at changed TP of INR 637. Wipro is currently trading at 24/21 for FY22/23E earnings of INR 22/25 respectively with EPS CAGR of 16% for FY21-23 respectively.